O Gloomy Town Of Bethlehem

Even an infusion of scarce Hamas cash for decorations couldn't coax foreign pilgrims to Bethlehem to celebrate Christmas.

Hundreds of people packed the Church of the Nativity on Monday to celebrate Christmas at Jesus' traditional birthplace, but they were mostly Palestinians, reports CBS News correspondent Robert Berger (audio).

Foreign visitors, who are critical to Bethlehem's economy, were largely absent, apparently deterred by recent Palestinian infighting and years of conflict with Israel.

The tensions, though, did little to dash the spirits of foreign pilgrims who did make the journey to the Holy Land.

"It's joyful being here. We come to celebrate the birth of Jesus, to see all the people, to sing songs and just praise God and give him the glory," David Bogenrief of Lemars, Iowa, told Berger.

"The experience was incredible," said Nick Parker, 24, of Goodland, Kan., who was visiting Bethlehem for the first time. "I could feel the true spirit of Christmas here in Bethlehem."

"To come here, the place where He was born, it's something you can't explain, it's like a warmth that was unbelievable," said Kate Greenberger of Fairfield, Conn.

For local residents, the atmosphere was gloomier. Shop owners, who make most of their income during the Christmas season, complained this year was among the worst in memory. Their shelves were packed with olivewood souvenirs but their shops were empty.

Palestinian shopkeeper Mary Jakaman told Berger she blames last summer's war in Lebanon and the recent fighting between Palestinian factions.

"It's not good. Because of the situation here, the tourists are afraid to come here," Jakaman said.

The Palestinian Ministry of Tourism said 3,500 pilgrims arrived in Bethlehem this year — only a small fraction of the tens of thousands who would arrive before Israeli-Palestinian violence broke out in late 2000.

The subdued Christmas adds to the woes of Bethlehem, which already is suffering from international sanctions imposed on the Hamas-led Palestinian government as well as Israel's separation barrier.

"The economic situation is very much affecting the Christmas atmosphere here," said Mary Bader, who came to celebrate from Jerusalem.

This Christmas is the first under a Palestinian Authority governed by the militant Islamic group Hamas. To alleviate Christian fears ahead of the holiday, Hamas promised that it would send $50,000 to decorate Manger Square in the center of town for the holiday. It was not clear if the money ever arrived.

The massive barrier encloses Bethlehem and separates it from neighboring Jerusalem. Israel says it built the barrier to prevent Palestinian suicide bombers from reaching Israeli population centers. Palestinians view the structure, which dips into parts of the West Bank, as a land grab.

In his homily at midnight Mass, Latin Patriarch Michel Sabbah, the Roman Catholic Church's highest official in the Holy Land, appealed to Palestinians to halt their recent "fratricidal struggles" and called for an end to Israeli-Palestinian bloodshed as well.

At the Vatican, Pope Benedict XVI took note of the recent meeting between Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas.

"I place in the hands of the divine Child of Bethlehem the indications of a resumption of dialogue between the Israelis and the Palestinians, which we have witnessed in recent days, and the hope of further encouraging developments," the pontiff said in his Christmas day speech.

With every Christmas, the Holy Land's Christian community shrinks a bit. The native Palestinian Christian population has dipped below 2 percent of the West Bank, Gaza Strip and Arab East Jerusalem, down from at least 15 percent in 1950, by some estimates. Bethlehem is now less than 20 percent Christian.